In the upcoming budget due to be announced by Nirmala Sitharaman on July 5, common men have high hopes and it is to be seen whether or not FM pays heed to these demands and give various income tax benefits such that these individuals are left with higher amount in their hands, providing boost consumer spending as well as saving scenario in an economy reeling under sluggish growth.
In the interim budget presented by Piyush Goyal, the centre extended the major benefit of tax rebate up to Rs. 5 lakh but as the tax slabs were kept unchanged, the benefit was not available to those with income over Rs. 5 lakh a year.
Here are a slew of income tax benefits, a common man can expect in the Modi 2.0 government's first budget.
1.Reduction in income tax rate:
For the salaried class earning up to Rs. 10 lakhs, the tax rate could be slashed from the current 20% to 10%, such that these individuals are left with more of disposable income.
2.Increase in 80C limit from Rs. 1.5 lakh:
For the different expenses and investments, the individual is allowed deduction up to Rs. 1.5 lakh from their gross income to reduce their tax liability. This is as per section 80C of the Income tax Act. The limit has remained the same for past 5 years and in view of the need for increased savings given the high cost of living, the ministry this time can increase deduction under section 80C limit to Rs. 2.5 lakh.
3.Deduction available for payment of interest on home loans can also be increased:
In order to achieve the Modi government's plans of housing for all by 2022, the government in the upcoming Budget 2019 may increase the deduction available for interest on home loan payment from the existing Rs. 2 lakhs to Rs. 3 lakhs.
4. Deduction on interest on savings bank account and deposits:
In the last year's budget, the limit was increased to Rs. 50,000 for senior citizens, meaning that interest earnings upto Rs. 50,000 on savings banks account and deposits were not liable for taxation. But the same limit is up to Rs. 10,000 for all other individuals, which can likely be increased in the upcoming budget.
5.STT may be done away with:
In order to boost more market-related and other investments, the govt. may do away with securities transaction tax or STT on stocks, mutual funds and other securities.